SOURCE: Venoco, Inc.

Venoco, Inc.

April 16, 2010 07:01 ET

Venoco, Inc. Announces Sale of Texas Assets and Revised 2010 Guidance

DENVER, CO--(Marketwire - April 16, 2010) -  

  • $100 million Aggregate for Three Asset Packages
  • Venoco Retains Hastings Back-in Working Interest
  • Closings Expected Late April to mid-May
  • 2010 Capital Budget Increased by $40 Million to Advance Monterey Shale Exploitation and Sacramento Basin Development

Venoco, Inc. (NYSE: VQ) today announced it has signed three purchase and sale agreements to divest its producing properties in Texas. The three agreements cover the Manvel field, the overriding royalty interest in the Hastings field and Venoco's other oil and gas production in the Texas Gulf Coast. The aggregate proceeds for the three transactions are approximately $100 million net of closing costs. The transactions are subject to customary closing conditions. Closings are expected to occur between April and mid-May.

The company will retain its 22.3% reversionary working interest in the Hastings field -- Venoco sold the field to Denbury Resources in February 2009 for approximately $200 million. Denbury is in the process of completing a pipeline to supply CO2 to flood the Hastings field -- the pipeline is expected to be completed by year-end.

"We are very pleased with the level of interest in these assets and with the value we'll receive," said Tim Marquez, Venoco's Chairman and CEO. "We will now redeploy capital to concentrate on our very exciting opportunities in California."

Capital Investment 2010

The company will adjust its capital expenditures for 2010 from $180 million to $220 million for development and other spending. 

Expenditures in the Monterey Shale exploration and exploitation program will be increased to $48 million from an original budget of $26 million. The company plans to double the number of wells it drills from five to ten in 2010, to acquire additional leasehold and to acquire 3D seismic data over certain portions of its Monterey Shale acreage.

The company will increase capital expenditures in the Sacramento Basin from an original budget of $72 million to $108 million. The company plans to drill 100 wells and perform 250 recompletions in the basin during 2010. Although natural gas prices are depressed in other parts of the U.S., the Sacramento Basin differentials to NYMEX have been positive over the last twelve months. In addition, Venoco has strong natural gas hedge positions in 2010 and 2011, with approximately 100% of its 2010 forecast production hedged at $6.48 per thousand cubic feet ("Mcf") and 60,000 Mcf per day hedged in 2011 at $6.31 per Mcf. Additionally, Venoco has been able to drive drilling costs down in the Sacramento Basin to the point where a $4.00 gas price is expected to generate a 25% rate of return.

In Southern California, the company plans to spend $64 million -- down slightly from an original budget of $73 million -- primarily focused on the redevelopment of the West Montalvo field, where it expects to drill three wells later in 2010. The company drilled and completed another dual completion well this year at the Sockeye field and is currently working on a second well, a horizontal leg off an existing wellbore.

"Our initial 2010 drilling program in the Monterey has focused on gathering core and log data, and understanding and predicting reservoir behavior," commented Mr. Marquez. "With additional capital, we'll initiate exploitation in three well-defined prospects and advance the completion technology phase. We have formed a Monterey Shale exploitation team and have handed-off these three fields to the new team."

New 2010 Guidance

The following summarizes the company's new 2010 guidance:

  • Production: 19,250 BOE/d
  • Capital Budget: $220 million
  • Lease Operating Expenses: $14.50 per BOE
  • G&A Expenses (excluding stock-based compensation): $4.50 per BOE
  • DD&A: $12.00 per BOE

Monterey Shale Analyst Day

Venoco will host an Analyst Day focused on its Monterey Shale exploration opportunities and exploitation program on Wednesday, May 26, 2010 in New York City beginning at 8:00 a.m. Eastern time. The presentation will be webcast and those wanting to listen may do so by using a link on the Investor Relations page of the company's website at http://www.venocoinc.com

Annual Stockholders' Meeting

The company's Annual Stockholders' meeting will be held on Wednesday, June 2, 2010 at the Brown Palace Hotel, 321 17th Street, Denver, Colorado, at 7:30 AM. Stockholders of record at the close of business on Monday, April 5, 2010, are entitled to receive notice of the meeting and to vote the shares of Venoco common stock they hold as of that date.

About the Company

Venoco is an independent energy company primarily engaged in the acquisition, exploitation and development of oil and natural gas properties primarily in California. Venoco operates three offshore platforms in the Santa Barbara Channel, has non-operated interests in three other platforms, operates four onshore properties in Southern California, has extensive operations in Northern California's Sacramento Basin and is exploring for and exploiting the onshore Monterey Shale.

Forward-looking Statements

Statements made in this news release relating to Venoco's future production, expenses, capital expenditures and development projects, the expected rate of return on drilling projects and all other statements except statements of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the company's future performance are both subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, matters disclosed in the Risk Factors section of the company's Annual Report on Form 10-K for the year ended December 31, 2009 and elsewhere in the company's filings with the Securities and Exchange Commission, which are incorporated by this reference as though fully set forth herein. The Company may not be able to complete its planned disposition of assets in Texas on acceptable terms, in a timely manner, or at all and its exploitation efforts in the onshore Monterey Shale may not be successful. All forward-looking statements are made only as of the date hereof and the company undertakes no obligation to update any such statement. For further information, please contact Mike Edwards, Vice President, (303) 626-8320; http://www.venocoinc.com; E-Mail investor@venocoinc.com.

Contact Information